Deal on student loan rate worth keeping

July 24, 2013

A compromise on student loans apparently will be approved this week in the U.S. Senate.

But even as lawmakers revealed an agreement, some hinted they may try to go back on it this fall.

Federal loans for higher education students had been available at a 3.4 percent interest rate. That has gone up to 6.8 percent, however, and liberals in Washington claim it will be devastating to many students.

That probably is not the case for most students. One estimate is the increase would add only about $2,600 to the 10-year cost of a typical student's loans.

Still, Sen. Joe Manchin, D-W.Va., wanted to do something to help - while avoiding new deficit spending to subsidize ultra-low rates. He and a few other senators came up with the idea of pegging interest rates to financial markets.

For now, that would hold interest rates down to about 3.9 percent for undergraduate students. But rates would rise - as they should - once the economy improves.

It's a win-win situation. Students get help without long-term, expensive taxpayer subsidies.

Again, the plan probably will be approved this week. A few Senate critics have said they may try to revisit it this fall.

Manchin and other thoughtful senators should prevent that. Their plan is a reasonable, responsible one - and it should be retained.